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Prime Minister Rami Hamdallah on Tuesday chaired the first meeting of the Palestinian Cabinet in Gaza for three years in a move toward reconciliation between the mainstream Fatah party and Islamist group Hamas.

Hamas ousted the PA from Gaza after bloody street fighting in 2007, but finally agreed last month to its return, under pressure from the territory's powerful neighbour Egypt.

Hamas has been the de-facto ruler in the Gaza Strip since 2007 after the party defeated Abbas' long-dominant Fatah party in parliamentary elections.

West Bank based Prime Minister Rami Hamdallah visited the Gaza strip Monday to meet with Hamas officials.

He said all outstanding administrative issues, including the issue of public employees, would be gradually dealt with in the framework of the 2014 Cairo agreement "within the available resources".

It was the first meeting of the cabinet in Gaza since November 2014, and comes a day after Hamdallah entered the territory for the first time since a unity government collapsed in June 2015.

The Qassam Brigades, Hamas's armed wing, are believed to have 25,000 members and Hamas has a stockpile of thousands of short-range rockets, as well as scores of longer-range Grad rockets that could strike Israeli population centers. The United States and the European Union blacklist Hamas as a terrorist organisation, complicating the formation of any potential unity government. Mohammed Dahlan, the former Palestinian security chief in Gaza and an Abbas rival, helped broker the deal with the other top Hamas chief, Yahya Sinwar, who grew up in the same refugee camp as Dahlan.

Mr Abbas's comments, in the face of Hamas insistence that it will continue to bear arms and that this is non-negotiable, dampen hopes that the reconciliation will bear fruit.

Hamdallah praised Egypt's role in healing the Palestinian rift.

The Hamas leader added: "We want a government to dominate the West Bank and the Gaza Strip and carry out its work without any interference from anyone". It failed to function in Gaza because of disputes between Hamas and Fatah over its responsibilities.

"We came back to Gaza to end all signs of division and rebuild", Hamdallah said in a televised news conference.

The Government of Palestinian National Reconciliation, Minister of Foundations and religious affairs Yusuf Idris, has surrendered its powers in Gaza.

"We are not prepared to accept bogus reconciliations in which the Palestinian side apparently reconciles at the expense of our existence", Netanyahu said. The government will try to manage the Gaza Strip, which was under Hamas control for more than 10 years. But with all the unknowns, she says, people in Gaza remain deeply sceptical about whether the symbolic ceremonies will lead to any changes on the ground this time around.